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Am I correct that it’s not necessarily $10B in withdrawals, as it is that the total market cap (valuation * total coins) dropped by $10B? Seems like an importa

Am I correct that it’s not necessarily $10B in withdrawals, as it is that the total market cap (valuation * total coins) dropped by $10B? Seems like an important distinction?

ShaneMcGowan 4y ago
Since Tether is a stable coin™ allegedly backed by and pegged to the price of 1 USD. So if the price is still $1 but the circulation has gone down by 10 billion, that means $10B worth of it has been cached out
- JumpCrisscross 4y ago
  > if the price is still $1 but the circulation has gone down by 10 billion, that means $10B worth of it has been cached out Tether being caught lying is practically perennial. Unless we have records showing someone receiving $10bn from Tether, it's safe to be sceptical of the claim.
  - ShaneMcGowan 4y ago
    Exactly why I used the word "allegedly", lol
- lamontcg 4y ago
  I still think that Bitfinex is operating as a central bank and primarily loaning out Tether against bitcoin (and eth) cold wallets. Instead of $10B of tether being converted to USD and taken out of the crypto ecosystem, what I suspect has happened is that $10B of loans have been paid back in tether and the collateral has lost value so the borrower cannot re-borrow the tether. Bitfinex doesn't ever redeem tether for USD and that isn't how tether is burned. This means that it is predominantly crypto backed, which will at some point collapse if crypto collapses, but it is much more intrinsically stable than Terra/Luna up until crypto fails. Maybe I'm wrong and we're about to see Tether bolt for the exits and crash and take out all of crypto with it. But crypto has been through a worse crypto bear market before, and Tether has been burned before without a systemic panic.
WJW 4y ago
Since the valuation is steady at $1, that means the total amount of coins must have decreased by 10 billion. Since the only way to remove coins is to convert them back out to USD (ie, 'withdrawing') there is not much of a distinction there.
spullara 4y ago
Isn't the point of a stable coin is that it is always worth $1 each? So market cap is a valuation of $1 * total coins has gone down by $10B. So that means 10B coins were redeemed.
- __turbobrew__ 4y ago
  Only if the stablecoin operator isn’t lying about the backing.
cormacrelf 4y ago
It's tether. It did briefly detach from its peg at USD $1 but the "valuation" of a coin has been roughly constant. It's $10bn out of originally $83bn, and it's still trading at $0.998 or so. So yeah, people have taken a big chunk of money out. That's called a withdrawal. We do not know that it is a cash withdrawal.
- piva00 4y ago
  It's still detached, and it's been the longest period it's been unpegged from US$1 since it started to have high volume. Look at any graph (coinmarketcap.com is an easy one), since early 2019 when volume picked up it was never more than 6-7 days below US$1. It's been for 14 days and counting this time.
manquer 4y ago
Tether is stable coin. Number of coins is valuation. Each coin is always 1USD (unless they loose the peg). So if 84 billion coins are there in circulation . 84 billion of dollars had been exchanged for coins . If the coins reduces to 73 billion then 11 billion coins have been redeemed back to dollars
xiphias2 4y ago
It’s a stable coin, so valuation is expected to be close to $1 as long as it works.
londons_explore 4y ago
Tether is pegged to the US dollar, so it's valuation (rarely) differs much from $1. Therefore it's the number of total coins which is falling.
deleted 4y ago
[deleted]
Ekaros 4y ago
Yes, it just means tokens were removed from circulation. Doesn't mean someone has redeemed them. It might have been action by Tether itself also. That is before they printed tokens without backing, used them to prop up market prices. And now they are pulling those out after likely making some gains when prices were high.
po 4y ago
All the people responding to you are missing the distinction too... They can create/destroy coins at will. They say that they only do this when customers receive/withdraw fiat but we all know that's not the case and they aren't truthful about it.
- tamrix 4y ago
  - stormbrew 4y ago
    No one's being told otherwise with banks though. The current backup plan for 19th-century-style fiat bank runs is central bank insurance and money printing, not a rather bold claim that the banks are holding on to tens of billion of dollars in cash and not doing anything with it.
    - arcticbull 4y ago
      > The current backup plan for 19th-century-style fiat bank runs is central bank insurance and money printing... It's the FDIC. The FDIC was created in the wake of the Great Depression to make sure bank runs stopped. And in the last ~100 years since it was created they've succeeded. [1] Banks pay into the fund, which is used to make depositors whole in the event of insolvency. If the fund is exhausted, the FDIC also has a line of credit with the Fed. They have $125B of assets give or take, and a $100B line of credit. That said, we haven't drawn on the fund yet, AFAIK. Even in 2008, when WaMu collapsed, the OTS took ownership of WaMu Bank and sold it to JPMorgan. [2] [1] https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp... [2] https://en.wikipedia.org/wiki/Washington_Mutual https://en.wikipedia.org/wiki/Washington_Mutual
      - danielrpa 4y ago
        There's more than the FDIC. The government has shown over and over that it will bailout and/or nationalize financial institutions that could bring the entire system down (such as AIG). I'm not saying this system is perfect, but it's a LOT more robust and time tested than any cryptocurrency we have today.
compsciphd 4y ago
if tether is backed 1:1 with dollars, how is it not withdrawals? I.e. either the number of total coins in circulation has dropped (unsure how that is different than withdrawing) or its valuation has dropped (i.e. it lost its peg). If they are just destroying coins, then they weren't 1:1 (possibly more than 1:1 before, but also possibly less).
- kravvall 4y ago
  Nobody, not even tether claims that tether is backed 1:1 by dollars.
  - carrja99 4y ago
    They did once, but changed their tune. People then get all hand wavy and point at the fact banks have fractional reserves too.
kolinko 4y ago
In tether’s case this is the same - withdrawals through it’s operator for fiat cash take tether off the market and lower it’s market cap. A more accurate description would be „withdrawals minus deposits”, but it’s quite obvious that this is what is meant.
- arcticbull 4y ago
  It depends. Tether lies constantly, and has lied many times. We have NYAG and CFTC settlements to that effect. The point parent is making, AFAIK, is that without actual audits (that they have promised for years were only months away) we have no idea if they actually processed $10B of withdrawals. Or whether they simply nuked $10B of unbacked Tethers from orbit. Maybe they printed $10B, used it to buy Bitcoin, then sold the Bitcoin back for USDT and nuked the USDT? We have no way to know without a formal audit.
  - jules-jules 4y ago
    Important to note that they can only nuke that is under their control right now, and presumably Bitfinex' (and perhaps some other entities). Everything that is in wider circulation can only be removed through actual withdrawals.
    - arcticbull 4y ago
      That's assuming they were paid dollars for those USDT by exchanges. An exchange could borrow the USDT, and when returned, they could be burned - with no dollars changing hands.
      - jules-jules 4y ago
        Yeah absolutely. Wouldn't surprise me in the least if the likes of Binance, Tron, and FTX issued Commercial Paper in exchange for USDT.
retube 4y ago
well it's not due to price changes, 1 USDT = 1$, so yes there are less coins in circulation. Poster below says Tether can create and destroy coins at will. They can certainly create them, not sure they can destroy them if in others wallets (and doing so would be a huge adverse news event). If they have destroyed coins can only be their own (in their own wallets) but I suspect that would also be transparent. My feeling is that yes there have been $10bn of redemptions.
- astrange 4y ago
  1 USDT has been less than $1 ($.998) for the last two weeks on coinmarketcap.
  - retube 4y ago
    sure. but that's immaterial to the discussion here.
    - kravvall 4y ago
      No, it's not. Because that could be a possible motivation for tether to remove supply, to artificially increase the price again, to get close to peg. And as far as I understand, nothing in Tether is transparent, so I'm not sure if they can't just destroy their own tokens without someone being sure that this is happening.
- jules-jules 4y ago
  They most certainly can't destroy USDT sitting in other people's wallets.
  - adhesive_wombat 4y ago
    They can mint a quadrillion Tether today and that would do the job pretty well. The Tether would still be in the wallets, but at that point it would be quicker to just read from /dev/urandom if you wanted some random-ish bits.
  - 4y ago

Am I correct that it’s not necessarily $10B in withdrawals, as it is that the total market cap (valuation * total coins) dropped by $10B? Seems like an important distinction?

ShaneMcGowan 4y ago

Since Tether is a stable coin™ allegedly backed by and pegged to the price of 1 USD. So if the price is still $1 but the circulation has gone down by 10 billion, that means $10B worth of it has been cached out

JumpCrisscross 4y ago
> if the price is still $1 but the circulation has gone down by 10 billion, that means $10B worth of it has been cached out Tether being caught lying is practically perennial. Unless we have records showing someone receiving $10bn from Tether, it's safe to be sceptical of the claim.
- ShaneMcGowan 4y ago
  Exactly why I used the word "allegedly", lol
lamontcg 4y ago
I still think that Bitfinex is operating as a central bank and primarily loaning out Tether against bitcoin (and eth) cold wallets. Instead of $10B of tether being converted to USD and taken out of the crypto ecosystem, what I suspect has happened is that $10B of loans have been paid back in tether and the collateral has lost value so the borrower cannot re-borrow the tether. Bitfinex doesn't ever redeem tether for USD and that isn't how tether is burned. This means that it is predominantly crypto backed, which will at some point collapse if crypto collapses, but it is much more intrinsically stable than Terra/Luna up until crypto fails. Maybe I'm wrong and we're about to see Tether bolt for the exits and crash and take out all of crypto with it. But crypto has been through a worse crypto bear market before, and Tether has been burned before without a systemic panic.

WJW 4y ago

Since the valuation is steady at $1, that means the total amount of coins must have decreased by 10 billion. Since the only way to remove coins is to convert them back out to USD (ie, 'withdrawing') there is not much of a distinction there.

spullara 4y ago

Isn't the point of a stable coin is that it is always worth $1 each? So market cap is a valuation of $1 * total coins has gone down by $10B. So that means 10B coins were redeemed.

__turbobrew__ 4y ago
Only if the stablecoin operator isn’t lying about the backing.

cormacrelf 4y ago

It's tether. It did briefly detach from its peg at USD $1 but the "valuation" of a coin has been roughly constant. It's $10bn out of originally $83bn, and it's still trading at $0.998 or so. So yeah, people have taken a big chunk of money out. That's called a withdrawal. We do not know that it is a cash withdrawal.

piva00 4y ago
It's still detached, and it's been the longest period it's been unpegged from US$1 since it started to have high volume. Look at any graph (coinmarketcap.com is an easy one), since early 2019 when volume picked up it was never more than 6-7 days below US$1. It's been for 14 days and counting this time.

manquer 4y ago

Tether is stable coin. Number of coins is valuation. Each coin is always 1USD (unless they loose the peg). So if 84 billion coins are there in circulation . 84 billion of dollars had been exchanged for coins . If the coins reduces to 73 billion then 11 billion coins have been redeemed back to dollars

xiphias2 4y ago

It’s a stable coin, so valuation is expected to be close to $1 as long as it works.

londons_explore 4y ago

Tether is pegged to the US dollar, so it's valuation (rarely) differs much from $1. Therefore it's the number of total coins which is falling.

deleted 4y ago

[deleted]

Ekaros 4y ago

Yes, it just means tokens were removed from circulation. Doesn't mean someone has redeemed them. It might have been action by Tether itself also. That is before they printed tokens without backing, used them to prop up market prices. And now they are pulling those out after likely making some gains when prices were high.

po 4y ago

All the people responding to you are missing the distinction too... They can create/destroy coins at will. They say that they only do this when customers receive/withdraw fiat but we all know that's not the case and they aren't truthful about it.

tamrix 4y ago
- stormbrew 4y ago
  No one's being told otherwise with banks though. The current backup plan for 19th-century-style fiat bank runs is central bank insurance and money printing, not a rather bold claim that the banks are holding on to tens of billion of dollars in cash and not doing anything with it.
  - arcticbull 4y ago
    > The current backup plan for 19th-century-style fiat bank runs is central bank insurance and money printing... It's the FDIC. The FDIC was created in the wake of the Great Depression to make sure bank runs stopped. And in the last ~100 years since it was created they've succeeded. [1] Banks pay into the fund, which is used to make depositors whole in the event of insolvency. If the fund is exhausted, the FDIC also has a line of credit with the Fed. They have $125B of assets give or take, and a $100B line of credit. That said, we haven't drawn on the fund yet, AFAIK. Even in 2008, when WaMu collapsed, the OTS took ownership of WaMu Bank and sold it to JPMorgan. [2] [1] https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corp... [2] https://en.wikipedia.org/wiki/Washington_Mutual https://en.wikipedia.org/wiki/Washington_Mutual
    - danielrpa 4y ago
      There's more than the FDIC. The government has shown over and over that it will bailout and/or nationalize financial institutions that could bring the entire system down (such as AIG). I'm not saying this system is perfect, but it's a LOT more robust and time tested than any cryptocurrency we have today.

compsciphd 4y ago

if tether is backed 1:1 with dollars, how is it not withdrawals? I.e. either the number of total coins in circulation has dropped (unsure how that is different than withdrawing) or its valuation has dropped (i.e. it lost its peg). If they are just destroying coins, then they weren't 1:1 (possibly more than 1:1 before, but also possibly less).

kravvall 4y ago
Nobody, not even tether claims that tether is backed 1:1 by dollars.
- carrja99 4y ago
  They did once, but changed their tune. People then get all hand wavy and point at the fact banks have fractional reserves too.

kolinko 4y ago

In tether’s case this is the same - withdrawals through it’s operator for fiat cash take tether off the market and lower it’s market cap. A more accurate description would be „withdrawals minus deposits”, but it’s quite obvious that this is what is meant.

arcticbull 4y ago
It depends. Tether lies constantly, and has lied many times. We have NYAG and CFTC settlements to that effect. The point parent is making, AFAIK, is that without actual audits (that they have promised for years were only months away) we have no idea if they actually processed $10B of withdrawals. Or whether they simply nuked $10B of unbacked Tethers from orbit. Maybe they printed $10B, used it to buy Bitcoin, then sold the Bitcoin back for USDT and nuked the USDT? We have no way to know without a formal audit.
- jules-jules 4y ago
  Important to note that they can only nuke that is under their control right now, and presumably Bitfinex' (and perhaps some other entities). Everything that is in wider circulation can only be removed through actual withdrawals.
  - arcticbull 4y ago
    That's assuming they were paid dollars for those USDT by exchanges. An exchange could borrow the USDT, and when returned, they could be burned - with no dollars changing hands.
    - jules-jules 4y ago
      Yeah absolutely. Wouldn't surprise me in the least if the likes of Binance, Tron, and FTX issued Commercial Paper in exchange for USDT.

retube 4y ago

well it's not due to price changes, 1 USDT = 1$, so yes there are less coins in circulation. Poster below says Tether can create and destroy coins at will. They can certainly create them, not sure they can destroy them if in others wallets (and doing so would be a huge adverse news event). If they have destroyed coins can only be their own (in their own wallets) but I suspect that would also be transparent. My feeling is that yes there have been $10bn of redemptions.

astrange 4y ago
1 USDT has been less than $1 ($.998) for the last two weeks on coinmarketcap.
- retube 4y ago
  sure. but that's immaterial to the discussion here.
  - kravvall 4y ago
    No, it's not. Because that could be a possible motivation for tether to remove supply, to artificially increase the price again, to get close to peg. And as far as I understand, nothing in Tether is transparent, so I'm not sure if they can't just destroy their own tokens without someone being sure that this is happening.
jules-jules 4y ago
They most certainly can't destroy USDT sitting in other people's wallets.
- adhesive_wombat 4y ago
  They can mint a quadrillion Tether today and that would do the job pretty well. The Tether would still be in the wallets, but at that point it would be quicker to just read from /dev/urandom if you wanted some random-ish bits.
- 4y ago